🚀 Alluo Boost — a new way to earn
UPDATE — New Locked Boost Pools live as at 23rd February 2023.
We’re pleased to announce the launch of our latest two new #BOOST pools — our first LOCKED Boost pools and our first foray into the @fraxfinance Frax.convex ecosystem with some juicy #realyields
- frxETH/ETH — 9.5% APY
- CVX/FRAXBP- 30% APY
These two new pools are locked pools🔒 with a 1-week locking period. Customers can still withdraw rewards at any time, but whilst you can request to withdraw deposits at any point in the cycle, you will only be able to access them when the harvest runs — weekly on a Sunday
In return for doing so, you get access to even juicier returns 🔥
Check out App.alluo.finance once live to get involved or read on to find out more about BOOST and how it works
👇
Genesis
Back at the end of August, we created a post about changing our tokenomics.
At the heart of it was the idea of being better partners to the protocols we invest in. So instead of selling all our $ALLUO locker’s yield farming rewards, going forward, we’ll reinvest and compound the rewards we farm back into Convex, boosting their potential returns.
Huh. Neat idea. What if we offered something similar to our customers?
Enter Alluo Boost.
Like many good ideas, we’re not the first to come up with something like this.
Alladin Dao has their concentrator, where they boost yields on Convex vaults by concentrating all rewards into auto-compounding top-tier tokens like aCRV (cvxCRV) and aFXS (cvxFXS/FXS).
However, we wanted to create something that worked slightly differently and was even more usable and accessible.
The lowdown
❓What is it?
Alluo Boost increases returns on customer deposits by automatically claiming and reinvesting rewards as auto-compounding CVX/ETH LP tokens. All without the customer doing anything after their initial deposit.
🧐 So what? Why is this interesting to me?
- Friction-free finance, Alluo does the heavy lifting so you don’t have to
- Not to mention saving you the high gas fees of doing it all yourself 💸 (about $85-$90 each week)
- Get exposure to CVX/ETH through depositing stablecoins (or other eligible tokens)
- Boost returns by over 25% while keeping the same deposit risk profile 👀
🤓 How does it work?
- Customers deposit stablecoins or approved tokens into the Alluo web-app
- The protocol converts them to the relevant LP token and stake in the respective Alluo “main” Convex or frax.convex vault
- Every week an automated decentralised process harvests the rewards from the “main vaults” and converts them to CVX/ETH LP tokens which are staked again on Convex in the “boosted vault”
- At the same weekly schedule, the protocol harvests rewards from the “boosted vault”, converts them to CVX/ETH LP tokens, and re-stakes in the boosted vault, so as to auto-compound rewards
- Customers can withdraw their principal (main vault deposit), or rewards at any time; apart from locked Boost farms where customers can request to withdraw funds at any point in the cycle, but will only be able to access them when the harvest runs weekly on a Sunday
💡 Things to remember
- Our Boost pools are a little different to our standard (non-boost) pools
- Our non-Boost pools operate on a fortnightly schedule; rates are set every two weeks and remain fixed until the next liquidity direction vote. Alluo makes money from the difference between the earned rewards rate and the rate given to the customer
- Whereas in Boost pools, 99% of rewards go to the customer and Alluo takes a 1% fee from the rewards
- Boost rates are directly linked to the convex rate and will change regularly as the Convex/frax.convex pool rates change
- Boost pools provide an opportunity to boost rewards by looping deposit pool rewards through a higher-yielding boost pool (with zero customer effort and no increased deposit risk!)
Deeper Dive
What does it look like for the customer?
Customers can access the boost pools from the main farm page.
Here you can see the StETH/ETH Boost farm is currently yielding c3.4%, FRAX/USDC Boost is 2.86%, whilst the CVX/ETH farm is currently yielding 32.66% APY.
Upon selecting a Boost farm, customers will see a new modal showing a summary of what they can expect.
After clearing the modal, the customers can deposit and withdraw as per any other farm, as you can see below 👇…
… but behind the scenes, the protocol goes to work.
Let’s dig in to find out more
If you were to head over to Convex you can see that the stETH/ETH pool is yielding 4.95%, of which 2.9% is in CRV and 2.05% is in LDO tokens.
Every week CRV rewards are harvested and then converted to CVX/ETH and re-staked into the Convex “boost pool” (which also serves the other “main vaults”).
Heading back to Convex, you can see, this CVX/ETH pool used as our boost pool is yielding 26.08% APR, of which, 10.48% is in the form of CRV tokens and 14.99% in the form of CVX tokens.
What’s the process?
So to recap what happens. Every week the Alluo smart contracts:
- Claim rewards from the “main pool” e.g. stETH/ETH pool where it is earning 4.95% in CRV and CVX (2.9% + 2.05%)
- Claim the rewards from the “boost pool” (the CVX/ETH pool yielding 26%)
- Converts all the rewards from those pools to CVX
- Add all the CVX to the CVX/ETH Curve pool and stake it in Convex to earn 26%
- Deducts the Alluo fee from the rewards harvested [currently 1%]
So on and so forth.
🧐 But wait, there’s even more
An additional point to note is that the CVX/ETH boost pool has the added benefit of being a 50–50 pool with exposure to two top-tier tokens of CVX and ETH 🔥.
This means that if you’re bullish on both tokens over the long run, your overall rewards will increase in value over and above the APY rate stated.
Or, if you’re bullish on ETH but less certain about CVX this pool would benefit from impermanent gains if ETH increases vs. CVX (of course, the pool might incur impermanent losses if ETH decreases in value vs. CVX).
Let’s also not forget the cost of doing this yourself, every week. Customers first need to:
- Stake: Take their base token (e.g. USDC), convert it to the relevant LP token, stake this on Convex
- Claim & re-stake: Claim rewards (from both the main pool and the boost pool), convert rewards to CVX, convert CVX to ETH/CVX LP, stake ETH/CVX LP
At 15 gwei gas price that can be about $100 in Gas just to do that process. Whereas it costs about $10–15 when doing it through Alluo as the protocol covers those fees.
🔥 What’s hot right now?
Our Alluo Boost strategy allows us to connect a boosted pool to any Convex pool that we choose as a “main vault”.
For a balanced risk/reward, we’ve currently chosen top-tier tokens with the highest yield as they represent the best options to boost.
So for example, right now, the yield on the CVX/ETH Boost farm is 32.66% 👀👀👀.
What’s happening here is we’re getting 26% on the CVX/ETH “main vault” (10.48% CRV and 14.99% CVX) and then looping that back into a CVX/ETH “Boost Vault” with the same 26% rewards🔥🔥🔥.
So what is the catch, how do I get my money out?
For standard Boost farms, as with fixed rate Alluo farms, there is ZERO lock-in period. For locked Boost farms, customers can withdraw funds once per week.
Standard Boost pools allow customers to withdraw whenever they want.
However, it is worth going a little deeper again to fully understand how withdrawing works.
There are essentially two parts to this. A) Customers can withdraw their deposit from the main pool AND B) customers can withdraw their accumulated rewards.
As you can see from the screenshot above, when withdrawing their deposit from the main vault, customers can choose to receive this back in any of our supported stablecoins (USDC, DAI, USDT, FRAX, agEUR) or one of the main base farm tokens (e.g. wETH, CVX, CRV).
Importantly, this can be done independently of withdrawing their rewards from the boost pool. These are 2 separate independent concepts in effect i.e. customers can withdraw either rewards or deposits (or both in separate transactions).
When withdrawing rewards, customers can withdraw the CVX/ETH LP token (to split themselves separately), OR they can request to receive it in USDC and Alluo does the splitting of the LP and converting it to USDC for the customer.
Locked Boost pools (clearly marked with a 🔒) are slightly different as they have a 1-week locking period.
Locked Boost pools (clearly marked with a 🔒) are slightly different as they have a 1-week locking period.
Like standard pools, you can withdraw your rewards at any point. However, deposits are a little different.
You can request to withdraw deposited funds at any point in the week, but you will only be able to access them when the harvest runs — weekly on a Sunday.
In return for locking your liquidity for a short time, you get rewarded with even juicier returns 🔥.
🧐 Wen withdraw ser?
As rewards compound, the real benefits of the boost pool happen over the medium to longer-term (i.e. the longer you leave your deposit in, the bigger the boost effect is).
Given the above and the relatively high cost of running the harvest and deposit process, the harvest and re-stake auto compounding loop happens every seven days on a Monday.
In between harvest and compounding, some rewards will build up in both the customer’s main pool and their boost pool.
Customers that withdraw their deposit between harvest cycles will forgo some of the rewards that have built up since the last harvest (depending on how much they withdraw).
Therefore, to maximise rewards, customers looking to reduce their initial deposit should withdraw just after a harvest has taken place.
To maximise rewards, customers looking to reduce their initial deposit, should withdraw just after a harvest has taken place.
This only impacts those withdrawing main deposits. Customers can withdraw accumulated rewards at any point and any pending rewards will be claimable after the following harvest, as long as they maintain the same deposit balance (or more).
To help customers make the best decision of when to withdraw we show how many unharvested rewards are at risk and the time between harvests.
⚠️ We’ve also created a warning modal to help signpost where customers could be at risk of reducing their future pending rewards.
In future iterations, we’ll look to increase the frequency of rewards harvesting and staking so as to improve flexibility for customers.
What does Alluo get from this?
Alluo takes a 1% cut on harvested yields. These fees are shared between $ALLUO lockers as part of the benefits they receive along with their ability to vote.
The APY shown in the farm menu already has this small fee taken out so as to make it clear to the customer what they will receive.
What’s next?
Phew, well that was a lot of information. Much excite.
Now you’ve digested it, you may be thinking what next?
Well, the best bit about Boost is that now the contracts and processes are built and tested, we can start to explore where else we can deploy these in a fast and cost-effective manner.
So, for example, we could perhaps create a process to create a MATIC main vault on Balancer and use the WETH/AURA pool as the Boost pool (currently boosting at 60%) 🚀.
So watch this space to see more Boosted Pools in the coming weeks and months. Or get in touch if you want to build one yourself for us 👀.
How do I learn more?
Not enough information ser? Woah there. If you still want to know more about Boost:
- Take a look around the web-app and have a play yourself (app.alluo.finance)
- Jump in the discord, telegram, twitter, or intercom (on the web app) and ask away ✌️
🚀 Ready to boost?
Alluo Boost is officially live!
Jump into our web app right here and get your money growing 🤩
